DOE

Coal rule might help client of ex‑lobbyist who crafted it

Sean Cunningham (right), director of the Energy Department's Office of Energy Policy and Systems Analysis, is the point person for Energy Secretary Rick Perry’s effort to subsidize coal storage. @BPC_Bipartisan/Twitter

Correction appended.

The official who's leading the charge for the Trump administration's effort to subsidize coal plants is a longtime lobbyist who represented a troubled Ohio utility that stands to directly benefit from the proposed change.

Sean Cunningham lobbied on behalf of FirstEnergy Corp. for 6 ½ years before becoming executive director of the Department of Energy's Office of Energy Policy and Systems Analysis this year.

Cunningham has played a key role in crafting the controversial proposal, according to four sources familiar with the proposal who spoke on the condition of anonymity.

The former lobbyist has been deployed by DOE to defend the rule in public and private in recent weeks, seeking to smooth over tensions with industry and appearing at a recent Bipartisan Policy Center event to tout the plan.

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His efforts have failed to assuage some industry critics, who believe the administration's initiatives have gone beyond helping the coal industry to providing advantages to specific businesses.

"This is all about serving one or two companies," said one industry official who opposes the rule. "The precedent is so bad on so many levels."

The Energy Department proposal, which would pay coal and nuclear plant owners for storing 90 days of fuel on-site, has attracted powerful opponents at some of the nation's largest power generators.

NRG Energy Inc. and Dynegy Inc. have come out against the plan, even though they would likely benefit from the new revenue stream it would provide (Energywire, Oct. 25). They argue the rule would distort wholesale markets and send electricity prices soaring.

FirstEnergy, meanwhile, has emerged as one of the loudest public champions of the plan. In comments to the Federal Energy Regulatory Commission, the body that will ultimately decide the fate of the Energy Department plan, the company predicted dire consequences if baseload power plant retirements continue.

"Ultimately, closures of nuclear and coal-fired generators will place the electric grid at risk of failure — if that risk does not exist already," FirstEnergy wrote.

Those comments come during a period of uncertainty for the Akron, Ohio-based utility. Depressed power prices and stagnant demand in the PJM Interconnection, a wholesale market stretching from Maryland to Illinois, have pushed many of FirstEnergy's coal and nuclear plants to the margins.

The FirstEnergy subsidiary that operates the company's power plants is mulling a bankruptcy filing. The company's CEO, Chuck Jones, reportedly joined coal magnate Robert Murray in lobbying President Trump personally to intervene and prevent the bankruptcy (Energywire, Aug. 23).

Jones recently downplayed his advocacy, telling financial analysts during a recent conference call, "I don't think the DOE initiative has anything to do with FirstEnergy despite what's been reported in some of the media." FirstEnergy, he added, remains intent on exiting the merchant generating business regardless of how DOE's proposal turns out.

The Energy Department plan could nevertheless deliver the company a boost, analysts said. A report by Energy Innovation and the Climate Policy Initiative, which advocates for a transition to clean energy, estimates FirstEnergy could reap up to $500 million annually.

FirstEnergy could still benefit from the DOE plan even if it exits the merchant power generating business, said Paul Patterson, a utilities analyst at Glenrock Associates.

"The residual benefit would be a potential mitigation to any [bankruptcy] claims event or, depending on what happened, some increased value for the units," Patterson said. "The better that business is, the better it is for FirstEnergy."

In Cunningham, FirstEnergy has a long-standing ally within the administration. Cunningham began lobbying for FirstEnergy in 1999 during his first stint at the law firm Balch & Bingham LLP, according to Senate lobbying disclosure records. The Ohio utility remained a client through 2001.

Cunningham then did a stint as counsel to Republicans on the House Energy and Commerce Committee, where he helped write and negotiate parts of the Energy Policy Act of 2003, before returning to the private sector in 2004. He picked up FirstEnergy as a client for Balch once again and was retained by the company when he moved to Hunton & Williams LLP, a prestigious law firm with long-standing ties to the utility industry, in 2005. FirstEnergy remained among Cunningham's roster of clients, which also included American Electric Power Co. Inc., Duke Energy Corp. and Southern Co., until 2008.

Senate disclosure forms show that Cunningham worked on issues relating to designation of transmission corridors and power plant emissions.

Cunnigham has also delved into debates over climate change. Last year, during another stint at Balch, he helped author an amicus brief for members of Congress opposed to the Clean Power Plan, former President Obama's rule to reduce emissions at power plants.

Dan McCrary, a partner at Balch, said much of Cunningham's work at the firm centered around the Federal Energy Regulatory Commission.

"We had a long history with Sean. He's a very thoughtful, strategic thinker," McCrary said. "He gets the big picture."

DOE officials sought to downplay the connection between Cunningham and FirstEnergy, and his role in crafting the department's proposal. They noted that Cunningham has not worked as a registered lobbyist since 2013. Much of his lobbying at Hunton was focused on attachments to utility poles. And they said he had not spoken to FirstEnergy since at least 2013.

Shaylyn Hynes, a DOE spokeswoman, said the department's proposal was the result of a "deliberative internal process."

But while Cunningham's lobbying days ended four years ago, his former employers remain close. Hunton continues to lobby on energy and environment legislation for FirstEnergy today.

Both the utility and the law firm declined to comment for this story.

Recently, Cunningham has assumed a more public role defending the plan. At a forum hosted by the Bipartisan Policy Center on Tuesday, he framed the retirement of coal and nuclear units as a national security issue. DOE's proposal, he argued, is an attempt to halt that trend (Energywire, Nov. 1).

"National security is a winner, no matter how you want to argue about it. And we are picking that," Cunningham told the crowd.

At another point, he added, "The war on coal is over."

Correction: An earlier version of this story misstated the number of years Sean Cunningham lobbied for FirstEnergy.

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